The deal, therefore, begs a few key questions for Sainsbury’s boss Mike Coupe, who will lead the combined group.

How will the merged business deal with the threat of discounters?

The merger will create the UK’s largest supermarket group if approved by regulators, but bigger does not necessarily mean better in an increasingly competitive market.

The challenge for the combined business will be finding ways to claw back some of the market share that German discounters Aldi and Lidl have taken (and continue to take) from the UK's biggest supermarkets.

Sainsbury’s is already taking steps to boost its position against rivals by investing in its own brands, launching more vegetarian and vegan options, expanding its baby range and introducing its own craft beers.

On completion of the planned merger, the two brands expect the deal to achieve £500mln in synergies by beefing up their buying power with suppliers, opening Argos stores in Asda supermarkets and improving operational efficiencies.

The supermarkets have promised to pass on the savings to customers with a 10% reduction to prices on everyday products, which could lure in more customers.

However, discount grocers are not the only threat to the supermarket groups.

How will the company respond to the shift from bricks to clicks?

The convenience of ordering groceries from the comfort of your home and having them delivered to your door has increasingly become the preferred way to shop.

Amazon Inc (NASDAQ:AMZN) has led the shift from bricks and mortar retailers to online clicks and is considered one of the grocery market’s biggest threats since its US$13.7bn takeover of Whole Foods Market last year.

The US e-commerce giant offers same-day delivery for groceries and recently opened a “shop and go” food store called Amazon Go, where shoppers can pick their goods and walk out by paying online rather than at the checkout.

In response, Sainsbury’s has started a same-day grocery delivery service in 182 stores, covering 60% of UK postcodes, while Asda’s current owner Walmart Inc has invested in the chain’s online operations.

The companies have said they plan to combine their online capabilities but have not said how that would look.

Will there be store closures or job cuts?

Sainsbury’s and Asda could be forced to offload stores to satisfy the Competition and Markets Authority.

Explaining its decision to refer the proposed merger to a more in-depth “phase two” investigation in September, the CMA said it found a “realistic prospect of a significant lessening of competition” in 463 places in the UK.

The regulator said its initial probe indicated an overlap with the supply or acquisition of groceries, fuel and homewares.

It added that the two companies would account for just over 30% of the groceries sold by the top nine UK supermarket chains and, alongside the market leader Tesco, would control a total of 60%.

The number of stores Sainsbury’s and Asda may have to offload to get the CMA’s approval is expected to be equivalent to nearly 40% of the combined group’s 1,210 supermarkets.

However, Tesco PLC (LON:TSCO) managed to receive the green light from the regulator on its deal to buy wholesaler Booker Group without having to sell any stores, so the CMA may decide to play equally nice with Sainsbury's and Asda.

What will be the leading brand?

Sainsbury’s and Asda have said they would continue to operate as separate brands but the question is, which of the two will become more dominant, particularly if they need to offload stores to soothe competition concerns or cut costs.

According to the latest industry data from Kantar Worldpanel, Sainsbury’s was the second largest supermarket after Tesco with a market share of 15.4% in the 12 weeks to October 7, down 0.4 percentage points compared to last year, while sales rose 0.6%.

Asda was not far behind with a market share of 15.3% for the period, although sales growth of 2.4% outpaced Sainsbury's as it focused on own-label lines.

The scales may tip in either direction after the merger, depending on the strategy Coupe takes.

Do shareholders support the deal?

Top shareholders are understood to be generally supportive of the deal but there are some concerns about the risks involved in combing the two businesses.

In August, Sainsbury’s third-largest shareholder, Invesco Perpetual, became the first to publicly support the merger.

According to The Times, Invesco Perpetual’s UK equities fund manager Martin Walker said the merger would help Sainsbury’s to go “toe-to-toe” with Tesco and offered “huge” financial benefits.

The newspaper said other top 20 shareholders it contacted were also supportive of the deal but some voiced worries about the complexity and difficulty in integrating two very different brands.

“Walmart has not been a very good owner of Asda, so maybe there is a huge opportunity to unpeel it all and move on,” one said

“Apparently, Mike Coupe got a round of applause when he went to the Asda HQ [after the merger was announced] and was welcomed with open arms. However, it is virtually impossible to read that as an outsider for now, so I think the jury is out. But this is a huge bite for them.”

Analysts at Shore Capital hold a similar view on the complications involved in the merger. They said the merging of two businesses that must compete in public and collude in private was the “most challenging feature of all of this whole exercise”.

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